Department of Energy Pours Funds
into Cleantech Industry

Dec 08, 2010
- McClatchy-Tribune Regional News - Energy Central

When Congress passed the landmark stimulus bill
in 2009, more than $90 billion was targeted at clean
energy -- the largest investment of federal dollars
in the energy sector ever. Nearly $3 billion was
awarded to the Bay Area from the Department of Energy
alone.

The infusion of money came at a critical juncture,
filling a void when the global financial crisis and
U.S. recession made other sources of funding hard
to come by.

The money ranged from a $1.37 billion loan guarantee
for Oakland-based BrightSource Energy, which broke
ground on its Ivanpah solar power plant in California's
Mojave desert last month, to manufacturing tax credits
and dozens of direct grants to local cleantech companies,
universities, labs and cities. San Jose will use
stimulus funds to replace 1,500 streetlights with
energy-efficient and programmable LED lights.

"Without a doubt, this is probably one of the
clearest successes of the Obama administration," said
Steve Westly, a venture capitalist who invests in
several cleantech companies. "In the middle
of the recession it was hard for companies to get
credit, and the DOE stepped in at the right time.
It was stunningly smart, and the private sector followed
in massive ways."

While the Department of Energy used stimulus dollars
to fund mundane projects such as appliance rebates
and weatherization assistance, it is also funneling
money into fast-evolving cleantech industries, from
electric vehicle battery and component

manufacturing plants to advanced biofuels. The Recovery
Act earmarks $4.5 billion to modernize the electric
grid, $2.4 billion for carbon capture and storage,
$2 billion for science research and $1.6 billion
for renewables like biomass, solar and wind -- emerging
sectors with a lot of Silicon Valley players.

"One of the big things we want to do is re-establish
cleantech manufacturing," said Matt Rogers,
a Piedmont resident and McKinsey consultant who managed
the DOE's Recovery Act dollars. "We are not
a substitute for, but a complement to, the venture
capital community, and it's a very competitive process."

Competitive is an understatement. The department
received more than 30,000 requests for funding, 80
percent of which were rejected. Several Silicon Valley
cleantech companies hired consultants, often at considerable
expense, to polish their applications, which usually
required a "narrative" describing the company's
technology, leadership team and business model as
well as technical documents. Some applications ran
more than 2,000 pages; some consultants commanded
fees above half a million dollars.

The DOE's disbursement of Recovery Act funds has
its critics. In September, Sen. Dianne Feinstein
sent Energy Secretary Steven Chu a letter questioning
why California, which has 12 percent of the nation's
population, received only 6.6 percent of the money
the department had available from the stimulus bill.

In Silicon Valley, much of the grumbling has centered
on the lack of speed. The Energy Department is not
designed to handle requests for loans and grants
quickly, and many have urged the department to streamline
the process.

"If there is a concern, it's that the DOE is
not currently set up to operate at the speed of business,
particularly the technology business," said
Carl Guardino, president of the Silicon Valley Leadership
Group. "When you take 18 to 24 months, that's
three to four business cycles in Silicon Valley."

Coulomb Technologies, a Campbell start-up that makes
charging stations for electric vehicles, first applied
for an Energy Department grant in May 2009. Months
passed, and by the fall CEO Richard Lowenthal heard
it was likely out of the running.

But in January, the company received a letter from
the Energy Department that essentially said: We like
your application but we want to see some changes.
Can Coulomb get formal agreements in place with three
automakers? And with nine cities? In 45 days?

"If you think the DOE is just going to hand
you a check -- it's not like that," said Lowenthal,
who hired a team of people to manage Coulomb's application. "They
make you earn that money. But I'm not complaining--they
are spending public dollars."

Coulomb scrambled and nailed down partnerships with
Ford, Chevrolet and smart USA. The work was worth
it: the
company was awarded a $15 million grant to install
5,000 residential and public charging stations in
nine geographically diverse regions: The Bay Area,
Austin, Detroit, Los Angeles, Orlando, New York,
Redmond, Wash., Sacramento and Washington, D.C. Coulomb
received its first DOE check in June of this year,
13 months after applying. On Tuesday, the company
is scheduled to install the first of its charging
stations funded by the grant in San Francisco.

"We had to prove that the electric vehicles
were coming," said Lowenthal. "I see the
DOE as an early adopter customer who is helping us
to scale, and they are creating an electric vehicle
industry in the United States."

Soladigm, a Milpitas start-up that makes energy-efficient
windows, was awarded a $3.47 million grant to take
its window technology out of the lab and into production.

"We are moving at a fast pace as a company,
and this grant will help us go faster," said
Soladigm CEO Rao Mulpuri. "We'll hire scientists
that we couldn't have otherwise, and we'll get to
commercialization quicker."

The Bay Area is widely regarded as the epicenter
of cleantech in the United States, followed by Los
Angeles, because of venture capital investment. California
attracted $2.1 billion in venture capital in 2009,
according to the Cleantech Group, far more than any
other state.

But as Recovery Act dollars are doled out across
the country, local cleantech companies have also
benefitted in indirect ways. Several of the nation's
leading utilities were awarded significant Energy
Department grants to help them modernize the electric
grid. In turn, they've hired Silicon Valley smart
grid start-ups like eMeter in San Mateo and Silver
Spring Networks in Redwood City.

AltaRock Energy in Sausalito, a geothermal company
backed by Khosla Ventures and Kleiner Perkins, was
awarded a $21.4 million grant to demonstrate its
technology near Bend, Ore.

"Venture capitalists and the Department of
Energy are both believers in trying to take a vision
and turning it into a reality," said AltaRock
CEO Don O'Shei. "VCs put their faith in technology,
and see it as a way to change the economic landscape.
The government is also thinking about the environment,
energy independence and national security, and they
want to catalyze technologies that will create whole
new industries. If you look forward five years, and
this is successful, the money will be like space
program money."